Wednesday, November 20, 2013

This is a follow on post from : Feb 2011 which looked at 2006 - 2010 Fortune 500 data. This post updates to 2013 Fortune 500 updates.

Three fast risers: Apple, Google and Amazon continue their surge.
Innovation can manifest as rising sales; bring new products to new customers (new iPad users) or old customers (selling iPad to iPhone users) or reselling products or services to old customers (such as selling apps to iPhone users). The Fortune 500 traces rising sales (rather than profits) which are more difficult than profits to manipulate.

Two techniques to inflate sales and therefore confound the Fortune 500 as a measure of innovation are: 1. buying a competing business and hence buying sales, such as Amazon buying Book depository. Thus mergers artificially inflate a businesses Fortune 500 ranking at the cost of liquid assets (paying cash) or by issuing shares. Thus I would adjust Sales from year to year by subtracting out sales from purchased businesses 2. Buying into a new industry by acquiring a business, such as Microsoft buying Nokia, Google buying Motorola, Facebook buying Instagram, or Yahoo buying Flickr. Such business purchases do not reflect bringing new products to old customers or reaching out to new customers.

These three fast risers can be compared to slower risers: Microsoft and Nike.

For comparison, three other companies are fairly static: Coca Cola, AT&T, and Berkshire Hathaway.
For companies near the top of the Fortune 500 there is nowhere further to go.

Thursday, August 1, 2013

I have arranged for four weeks leave from my work at ANDS (Australian National Data Service), so tomorrow I can start writing my first postdoc papers on Value and Innovation. But which paper to work on first. Here are the options:

A value theory of innovation (value in theory)
Target Journal: Australian Journal of Emerging Technology, Research Policy, Journal of Product Innovation Management, IM Policy and Practice and ultimately Harvard Business Review

A fifth paper, I thought about today is: Accounting for Research and Innovation and why accounting concepts are poorly suited for business and government measuring innovation, and why value is a better framework to assess innovation by.
Target Journal:

A sixth paper is about a value interpretation of using case studies to measure research impact. See Dept of Innovation Discussion Paper on Measuring Research Impact: http://www.innovation.gov.au/impact for which comments are due shortly on August 16.
Target Journal: Research Policy

So the next question is how do I decide the order. The last paper is the smallest, pointing at a tool. The first paper is the largest and the most theoretical, introducing the concepts. The second and third papers are implications of the value theory. The fourth paper is an explanation of a value tool; the Value Frontier for visualising value in multiple dimensions.

The first paper, to make it more manageable could be split into two papers:

Dimensions of value: what consumers value in 3G mobile phones

The process of value: how consumers construct value in 3G mobile phones

So there are several issues. The second, third and fourth papers rely on the concepts in the first paper/s.
But the first will be the longest to develop.
So should I write a fast tools paper with no conceptual basis, or grind through the theoretical paper.
Perhaps I can write them all together and jump backwards and forwards between them to keep me fresh and motivated.
But I am concerned that I might go around and around and not get to the end of any of them. Hmmm...

Which paper would be the most fun and keep me most motivated? Probably the tools paper.
Which paper is the obvious choice to start with? The theory paper, but it is a drag... and likely long and slow... and I am impatient for progress...
Which paper makes most sense to start with?

So ultimately this becomes a value question. The tools paper is 'fun' and 'quick', 'interesting' and 'lower impact', but the theory paper is 'slow' and 'laborious' but with 'high impact'. The tools paper also would make less sense without the theory paper to explain what is going on. However, I could likely reference the PhD document heavily for the conceptual basis.

Hmmm... your comments appreciated...

...after sleeping on it... I have realised the Dimensions of Value is the right place to start. See Ferrers (2009) for an early mention.

Key points:
- let's measure value alongside other accounting measures
- Value is complex
- measuring value is complex- some approaches to measuring value in practice: the Australian National Data Service (where I work: I was interested to know the process ANDS has in place to know what customers value)
- value theory: the 3G mobile phone study (my PhD):

The conference is interested in: Identify[ing] ways to measure and maximize the value of intangible assets...
The presentation in text (and your comments as always are welcome... questions, examples, critique is also welcome as this helps flush out and improve the Value Theory)....

Bailey, S. (1825). A Critical Dissertation on the Nature, Measures and Causes of Value. London School of Economics (1931), viewed 30.06.2009 at
http://books.google.com/books?id=onJnPnLxPcMC&printsec=frontcover&dq=bailey+1825+value
&source=gbs_book_other_versions_r&cad=8#v=onepage&q=&f=false

Wednesday, May 1, 2013

Aside from the innovations systems approach (wikipedia), can you think of other methods for analyzing an economy’s innovation capacity and output (from a macro perspective)? If the answer is yes, explain the advantages/disadvantages of the alternative in comparison with the innovation systems approach.

Namely that an economy's output (O) or GDP, is a function of the inputs, labour (L), capital (K) and technology (T) or innovation. So technology allows more output from a given amount of workers and investment. T is really the intangibles left over after the tangible inputs are counted, including innovation, skills, intellectual capital and networks. I will consider T to substitute for innovation.

To O, I add V for value. Value is the intangible benefits consumers get from purchases above what they pay for goods. V can be measured relatively by asking the question of a product, firm, industry or country (X); does X provide more value than last year? A sample of say 1000 people are asked the question on a scale of 1-5, where 1 is much worse and 5 is much better.

Thus, O + V = f(L ,K ,T).

The macro innovation output (T) is thus solved as the residual in the formula after finding values for O, V, L, and K. The innovation capacity is the maximum value of T over time.

2.Advantages and disadvantages of the VGM model

The advantage of VGM is that T can be found for a sector, firm, industry or nation. The VGM applies equally to services, like health, finance, media and government as well as more traditional manufacturing. The VGM also takes advantage of both tangible and intangible inputs and outputs, and is relatively straightforward to calculate.The VGM model is quite simple to understand. While T is not broken down, it provides a concrete measure of innovation.

The disadvantage of VGM is that the focus is really on output rather than capacity. Capacity is inferred from the maximum T over time, but this assumes that T does not vary randomly, which is not known. The model focuses on financial measures, but excludes the value of connections in the economy; these are included in T. The VGM is less a prescriptive policy guide than a measure like inflation, GDP or unemployment. The VGM is not an absolute measure, since value is measured relatively rather than absolutely.

3. Comparing the VGM with the innovation systems (IS) approach

The VGM is more simple, straightforward and concrete than IS. VGM is a measure whereas IS is a descriptive method of analysis. IS is complex, powerful, dynamic and interactive but it is also a little vague about where to begin since it includes a very wide range of possible information. IS is also more capacity oriented so makes more sense in manufacturing, mining and telecoms sectors where capacity is important, whereas VGM can be used to assess innovation in services, government and non-profits through understanding value created. IS focusses more on inputs to innovation and firms whereas VGM focusses more on outputs of innovation and benefits consumers get from innovation (value). The VGM is more simple, direct and thus quicker and more straightforward to calculate.

Monday, April 22, 2013

I am currently studying two courses on Coursera. One is about the micro - individual consumer decision making; Irrational Behaviour. The second looks at the macro - Innovation policy in China; Science, Technology and Society in China This weeks assignment asked students to postulate a better version of the linear model of innovation:

The Course version of the linear model: basic research -> applied research -> development > testing -> commercialisation

I prefer a simpler version of the linear model: research/invention -> innovation -> diffusion. Long ago, I posted an extension to the linear model include value, titled 'Where does value fit in innovation?'.

On reflection, I have updated my thinking to
propose a modified linear model, I recently tweeted:

My 500 word essay - Draft 1:

My alternative to the linear model
My model (pic.twitter.com/QuEySdFzkY) adds three new features to the linear model; which I summarise as research (new knowledge, basic and applied) -> innovation (new products, development and testing) -> diffusion (spread of products or commercialisation).

Firstly and most importantly, it adds indications of the level of divergence from the linear path, suggesting most research doesn't create products, and most new products don't succeed in the marketplace. Success is uncommon.

The second new feature is the model shows what happens as an alternate to succes, and adds two new activities; adding to the 'body of knowledge', for research that doesn't create products, and 'problems' for innovations which are not successful.

Thirdly and lastly, between the last two phases; innovation and diffusion or as the lecture says between testing and commercialisation, I add a new assessment activity I call consumer value. Consumers judge the value of an innovation both before in choosing and after using a new product. The chance for a new product to spread depends on a favourable recommendation from early users.

Minor changes also include loops back to research, and society affecting a consumer's needs.

Conceptual Differences - how my model is different in theory
The linear model is a one way model, with no alternate paths, and no feedback loops. My model adds both feedback loops and new stocks of problems and knowledge which result from getting off the linear path, which can restart the research process. Research is both science creating new knowledge and practical problem solving in industry.

Operational Differences - how my model is different in practice
My model shows innovations can arise from consumer pull, from solving innovation problems, as well as from science push. This is consistent with von Hippels' finding in his book "Sources of Innovation" (1988) that much innovation comes from solving business problems, rather than from science.

Why my model is better - conceptually?
My model is more realistic, while adding only a small amount of complexity. Feedback loops are importantly included, and explanations for what happens to the majority of non-commercial research and failed innovation which consumers have problems with.

Why my model is worse - conceptually?
The linear model is a powerful story, simple and elegant, lean and mean. The linear model tells a positive story, while my model shows the larger negative side of innovation and non-commercial research. My model suggests investing in research is not assured of positive social outcomes, so is threatening to funders of research.

Why my model is better - operationally?
My model shows a simplification of a complex reality. Not the most simple, but simple enough to tell a subtle and nuanced story about the challenges of research and innovation; that both risk creating no social benefit in the short term but improve our knowledge base and tell us what doesn't work.

Why my model is worse - operationally?
For a non-academic audience, the simple story is probably best. Too much information confuses and hides the message. My model adds new boxes, feedback and new concepts; such as value, which are likely confusing to a lay or non-scholarly audience.

I commend this rework of the linear model of innovation for your consideration.

But I was disappointed to see that the pdf file was only available to UQ staff and students, though it was great to see 7 downloads before I even knew that the catalogue entry was online.... So I set it free (CC-BY) @figShare: Understanding what consumers value in 3G mobile phones... A consumer 'value' theory of innovation in 3G mobile phones: a grounded theory approach http://shar.es/JXAU6via @figshare ... pdf to go..
One of the benefits of Figshare is:
- the allocation of a DOI : http://dx.doi.org/10.6084/m9.figshare.680002A DOI is a permanent identifier and a custodian who promises to always make it available for the foreseeable future...
- a second benefit is that I put into action, with my own research, my work at ANDS to promote better research data management, sharing and reusing of data. In other words, I practice what I preach.
- a third benefit is I put a licence on my thesis: it is now released as CC-BY, which means I have shared the copyright with the world, so long as I am cited as the author, and the work is not commercialised.

Sunday, February 24, 2013

Microsoft Dynamics is sponsoring an Economist Debate on intra-firm innovation.... (Do most businesses adapt too slowly to change?) They say in their marketing pitch:

At the heart of every business are the people who make things happen. People garner insight from business applications to drive decisions that advance the organisation. People manage relationships internally and externally to drive relevant actions forward. The most successful businesses are powered by individuals who are contributing fully, able to make a difference and committed to their company's success. Microsoft can help individuals—and organisations—realise their full potential and make a significant impact by offering an end-to-end business solution that is flexible and easy to use.

This focus internally on employees suffers from a balancing lack of focus on customers/consumers, their needs, finding what they are and servicing them ie customer value and value management...

Microsoft seems to see employees and their relationship with their firms as their core business, but not enabling a better link with their customers.... Even though their system is part CRM (customer relationship management)... go figure....

Microsoft Dynamics is a flexible, powerful business solution for customer relationship management (CRM) and enterprise resource planning (ERP) that enables you to be agile and progressive in a constantly changing world.

My thesis was signed off by the Uni thi week... (after 8.5 years; 1.5 years examination, 1 year break, 1 year coursework, 1 year figuring out I needed to learn to write an essay, commenced 22.06.04 - 07.01.13)...

...I am pleased to advise that you have completed the requirements for the award of your degree. Please accept our sincere congratulations on this achievement.

.. When I tell people I am studying PhD they roll their eyes as I am about to tell them the topic, and they suspect it will mean nothing to them. But when I say, "I am looking at how consumers buy mobile phones" they relax because it is something they can identify with.

My thesis inbrief: How do consumers buy mobile phones? Why do innovations fail? Why do new technologies go unused? How do consumers decide if they want to buy a new technology? I interviewed 3G mobile phone consumers to find out. What came out was an emphasis on value. Value is tricky because it is so complex. Value is personal, social, and sensitive to new information. 3G consumers described 80 types of value I summarized to 12 value meanings. I developed a process model of value. A value perspective of innovation expands the innovation definition from new and different to new and useful or otherwise valuable.

Currently employed by the Australian National Data Service, where I push my understanding of value to better help Universities serve the research data management needs of researchers. I am particularly interested in how measuring value impacts how we understand and measure innovation and how it might impact national innovation policy.

Lessons Learned:
1. Patience, persistence and perseverance
2. Being in the same city with your Advisor's will speed things up
3. Learn to write. Not realising I couldn't write a five paragraph essay cost me at least a year's time - see notes here
4. Time and space are important to get your thinking straight.
5. A problem you really care about will keep you motivated but make you less flexible. Refusing to budge on some things will slow you down.
6. Letting go. My original topic was cut in half several times. See PhD blog 2004-7 here at Internet Archive.
7. Writing results didn't get traction until I found the right structure to tell the story (qualitative research). Might be different with a more formulaic quantitative thesis.
8. Write early. Write often. Not all the text fits in a thesis, so write a blog to store/archive/curate that text. My blog attracted close to 12,000 views. Now to turn those views into citations.
9. Use your time and writing to publicise your ideas into forums where the question you are answering will help others. See the list above to where I submitted a value perspective: corporate (NBN), government (US Dept of Commerce, Garnaut Climate Change Review), conference (DRUID), competition (HBS Innovating Innovation Challenge).
10. Keep healthy, exercising, get some time away from your desk. I got married, helped have a baby, and get my wife through a pregnancy and birth, moved cities, moved jobs. Yet the thesis kept on keeping on... until now... Perhaps the blog will remain the hearth that brings me back...
11. As webpages disappear... archive.org remembers them mostly...

B. Compare this to assisting meetings in real time.
Help meetings in real time... This week we had 16 in our weekly meeting... Planning for the year...

Old way

Gather ideas in doc, www page

Discuss

Action Points

New way

Tweeting ideas (Anonymous if wish)

Live voting: crowd vote

Live commenting

Issue: Will reading distract too much from listening...?

C. See similar comment on Prime Minister's talkfest roundtable (3:35:00 video; data but no video)
Tweet: 04.10.12 Talkfest at #pmdigital but where is the tweetstream... where are the online notes for each speaker, where is the real time voting +1

Next steps: Martin, we could build tools to integrate these functions....Thoughts...?

Motorola A920:
Early 3G mobile
2003
Motorola lost $4B 2007-9
Sold to Google.

Two versions of a 100 word abstract for the final thesis award:

1.In this thesis, I examine how mobile phone consumers understand and experience value in 3G mobile phones, from the perspective of innovation theory. Value is an important concept in innovation theory, but it is only partly analysed and defined. This thesis opens and explores the black box of value, to analyse and define value as fully as possible, to better understand innovation, particularly how and why consumers adopt innovation in the form of a new technology. A focus on value expands the way innovation is defined from something new and different to something new and useful or otherwise valuable.

2.Why do innovations fail? Why do new technologies go unused? How do consumers decide if they want to buy a new technology? I interviewed 3G mobile phone consumers to find out. What came out was an emphasis on value. Value is tricky because it is so complex. Value is personal, social, and sensitive to new information. 3G consumers described 80 types of value I summarized to 12 value meanings. I developed a process model of value. Value expands innovation beyond the new to the new and useful.

The peer reviewed copy

The informal explanation

A third version (follows what is it about; why it is important; what did you find; how does it change anything):

3.This thesis explains how and why consumers buy 3G mobile phones, to better explain how consumers understand innovation in a dynamic environment. Innovation theory has focussed to heavily on understanding how firms manage innovation, and on innovation narrowly as something novel and different. Value emerged from my analysis as a better explanation for and process of consumers' adopting new technology. I found 12 value meanings and practices which analyse consumer valuing as complex, subjective, social and sensitive to new information. A value perspective expands innovation definition from new and different to new and useful or otherwise valuable.

Which do you prefer?

iPhone 3G:
2009 advertisement for App Store
1B app downloads in first ten months
Largest public company in world 2011.
Grew from #300 (2003) to #5 (2013): Fortune 500.

Nearly there:... "Once you have confirmed that your field of study and thesis title are correct and have added your 100 word abstract, you will be considered to have met the requirements of the degree..."